Beyond Investments: The Other 401(k) Responsibilities

We’ve all read about the lawsuits questioning an employer’s 401(k) investment fund selections and related claims of excessive fund costs. And typically a plan’s professional investment advisor (yes – you should have one unless you have an investment professional on staff) meets with company representatives periodically to discuss a detailed report on fund investment performance and any recommended changes in the plan’s investment fund selections. So, your 401(k) plan files bulge with investment-related materials (and they should!). But what about the rest of an employer’s 401(k) responsibilities?

As posed by the moderator of the 401(k) panel at the Illinois CPA Society’s recent annual Summit that I had the pleasure of appearing on, what should plan sponsors be paying attention to in addition to monitoring plan investment results?

Good question – so what can you do to get a leg up on the rest of the 401(k) universe?

Consider online IRS compliance guides like “A Plan Sponsor’s Responsibilities”. This material covers plan documentation, monitoring plan service providers, internal controls, law changes, payroll data you need to share with plan providers, hardship distributions, participant loans, ERISA fiduciary bonds, as well as eligibility, vesting and benefit payment matters. It also provides links to other IRS compliance resources and is a good starting point to find more detailed information on specific plan administrative requirements such as government filings, participant notices and fiduciary requirements. Also consider articles such as “Your Fiduciary Duty – And What to Do About It”.

Takeaway:

There’s more to an employer’s 401(k) responsibilities than selecting and reviewing plan investment funds. Remember, as the “Plan Administrator,” the buck stops with the employer when it comes to all compliance matters. So, consider IRS guidance as a starting point, but do not hesitate to address any resulting concerns with your plan’s investment advisor, third party administrator, accountant or ERISA lawyer.